The big five of the tech industry Facebook Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), and Google’s parent company Alphabet Inc. (NASDAQ:GOOGL) – which are accused of silently acquiring small but promising companies time to time in a bid to kill competition are in trouble.
Big tech has been under scrutiny for a long time now, for various reasons. One of the most recurrent issues within this discourse has been the large imbalance in the number of customers between big tech companies and smaller tech companies. This immense market dominance has led regulatory bodies to question the fairness of competition within the tech industry.
While attempts to study this have been taking shape for a while now, the efforts finally seem to have culminated into something potentially concrete. On Tuesday, the Foreign Trade Commission (FTC) ordered the 5 tech giants to disclose complete acquisition data from 2010 – 2019.
The data that the FTC is hoping to derive from this information is whether any small acquisitions, which did not mandate reporting to an antitrust regulatory body, was made to nip emerging competition in the bud.
Such acquisitions are known as killer acquisitions. A bigger company buys a competitor they see as potentially threatening to eradicate all chances of that company overtaking the already established company’s popularity and market dominance.
For the moment, the requested data will only be used for research purposes, according to FTC chair Joseph Simons. But Simons also stated in no unclear terms that the findings of said research could lead to enforcement if the need arises.
When reached out to for comments on the subject by The New York Times, most of the companies on the panel didn’t respond. A Microsoft spokesperson said the company was “looking forward to working with the FTC to answer their questions.”
Acquisitions in the past decade
All giants under the lens have an overwhelming number of worldwide consumers and an equally overwhelming amount of capital.
Including the acquisition of Instagram and WhatsApp, Facebooks has acquired about 78 companies in the past decade. Zuckerberg has expressed his views on Facebook’s acquisition criteria, stating that acquisitions are generally made on the basis of talent. Meaning to say, Facebook acquires companies with innovative ideas and technology, to possibly become the pioneer of as many groundbreaking releases as possible.
Google’s acquisitions have mainly been focused on cloud computing and AI. According to security filings, its parent company spent $1 billion on various small acquisitions in 2019.
Microsoft’s 2019 acquisitions were similar, coming in $1.6 billion. Microsoft has also been dropping continuous hints about its eagerness to bring about the next big change in the tech industry.
Facebook has a total of over 2.5 billion monthly active users. Google offers a wide range of services ranging from browsing to music. Gmail is one of the most used email services in the world. Microsoft’s net income in 2019 clocked in at $39.2 billion. In 2018, Apple’s net revenue was at its highest, and Amazon has been steadily extending its services to various regions of the world. Most recently, Bezos spoke of his high hopes from Amazon’s Brazilian consumers, as Prime recently became available in the South American country.